NEW DELHI — Pressured by a possible price hike from Boeing in its planned purchase of 22 AH-64E Apache and 15 CH-47F Chinook helicopters for the Air Force, the Indian Ministry of Defence is considering inking the final contract before March 31 when the price set by Boeing will expire, said an MoD source.
A Boeing executive of Boeing said the company cannot guarantee it whether they will be able to keep the price quote beyond its expiry March 31st because it the company cannot afford to "wait endlessly,"ness", he said. as he put it.
India delayed held back signing of the contract because of a lack of funds. Even in the current financial year, which ends March 31, st, 2015 there are no funds for new fresh purchases because money has as funds have been diverted from the Capital Head, which is reserved for buying new fresh weapons, to the Revenue Head account, which is used to pay for salaries and day-to-day expenses of the 1.5-million-person military.
Under these circumstances, . To find a way out, MoD is now considering signing inking the $2.5 billion contract before March 31st but begin making payments in the next financial year, which runs from beginning April 1 , 2015 to March 31, 2016, the source said.
The Boeing executive said they will respond to this method of payment after such a proposal is received.given to them.
However, before the deal is inked it will need clearance from the Cabinet Committee on Security which is the highest body of the government, headed by the prime minister and which clears big ticket weapon purchases. before the contract is inked. "MoD is now working overtime to get the clearance in the forthcoming meeting of CCS," the source added.
The Indian Air Force IAF selected Boeing's AH-64E Apache and CH-47F Chinook helicopters over the Russian Mi-28H Night Hunter helicopter and Mi-26 heavy lift helicopter in 2012.
Analysts were expecting that the Boeing helicopter deal to with Boeing would be inked during President Barack Obama's visit to New Delhi Jan. 25 to 27 to send a positive political message.
An MoD official, however, said the helicopter deal with Boeing is just one part of the Indo-US defense ties as the two countries are now looking forward to jointly produce weapon systems under the Defense Trade and Technology Initiative. (DTTI).
"The deal would in any case had been signed," the officialhe said.
Boeing's threat seems to have worked and IAF is likely to get the much needed Attack and Heavy Lift helicopters.
The heavy lift helicopters when acquired from Boeing will replace the two dozen Russian Mi-26 helicopters acquired in 1980, several of which whom are now grounded because of lack of spares. The Apaches helicopters will replace the aging Russian-made Mi-25 and Mi-35 attack helicopters being operated by the Air Force.IAF. Ends
Email: vraghuvanshi@defensenews.com.
Vivek Raghuvanshi is the India correspondent for Defense News.
